The court ruled that an adjudicating authority must diligently exercise discretion regarding confiscation of unauthorized funds as per statutory provisions and not based on hardship alone.

JUDGMENT :

P.Krishna Kumar, J.

Appellant is the Enforcement Directorate, the Government of India. Pursuant to the search and seizure of currency from the respondent by the officers of the appellant, an adjudication order was passed on 24.10.2002 by the Adjudicating Officer, under the Foreign Exchange Regulation Act, 1973 (“the Act”, for short). By the said order, it was found that the respondent had violated Section 9 (1)(b) of the Act, and a penalty of Rs.8,00,000/- was imposed on him. However, by the same order, the respondent was exonerated of the charge under (1)(d) read with Section 64(2) of the Act. Feeling aggrieved, the Enforcement Directorate, the petitioner in the adjudication proceedings, preferred a revision petition before the Appellate Tribunal for Foreign Exchange. By order dated 12.05.2004, the Tribunal upheld the order of the Adjudicating Officer, against which the present appeal has been filed under Section 54 of the Act.

2. The brief facts necessary for the disposal of this appeal are as follows: On 02.03.2000, officers of the appellant conducted a search at the residential and business premises of the respondent, which led to the seizure of Rs.51,00,000/- in Indian currency from his possession. The investigation that followed the search revealed that the respondent had unauthorisedly obtained Rs.50,00,000/- from outside India at the instance of one Rafi of Jeddah. On receipt of the amount, the respondent attempted to hand over Rs.25,00,000/- to a local person, in contravention of the provisions of the Act.

3. In the statement recorded on 02.03.2000 under Section 40 of the Act, the respondent stated that he was in need of Rs.25,00,000/- for expanding his jewellery business, and that he had requested his friend Rafi for financial assistance when the latter visited India. After reaching Jeddah, Rafi sent the amount through a third person. Rafi informed the respondent that he would send Rs.50,00,000/-, out of which Rs.25,00,000/- was to be paid to a person named Mahadev from Coimbatore, who would meet the respondent carrying a currency note bearing a specified number. However, owing to the interception by the enforcement officials, the respondent could not transfer the said amount to Mahadev.

4. The Adjudicating Officer, after meticulously analysing the evidence, including the retracted statement of the respondent dated 30.03.2000, arrived at the finding that the respondent had contravened Section 9 (1)(b) of the Act by receiving Rs.50,00,000/- under the instructions of a non- resident without obtaining permission from the Reserve Bank of India. The charge under (1)(d) read with Section 64 of the Act, relating to an attempt to pay money to another person, was dropped by the Adjudicating Officer on the ground that the respondent had not made any positive efforts to effect the payment and that the offence of attempt had therefore not been completed. Accordingly, the officer limited the penalty to Rs.8,00,000/- and did not proceed to confiscate the remaining amount, taking into account the purpose for which the respondent claimed to have received the money, namely, for expanding his business.

5. In the revision petition filed before the Tribunal, the appellant contended that the entire seized currency was liable to be confiscated. It was also contended that the respondent ought not to have been exonerated of the violation under Section 9 (1)(d) read with Section 64 of the Act. The Tribunal noted that Section 31 of the Act does not require any reasoning for ordering release of the seized currency and that such an order was passed by the Adjudicating Officer in the exercise of judicial discretion, hence there is no reason to interfere. The